Correlation Between Clas Ohlson and Peab AB
Can any of the company-specific risk be diversified away by investing in both Clas Ohlson and Peab AB at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Clas Ohlson and Peab AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clas Ohlson AB and Peab AB, you can compare the effects of market volatilities on Clas Ohlson and Peab AB and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Clas Ohlson with a short position of Peab AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clas Ohlson and Peab AB.
Diversification Opportunities for Clas Ohlson and Peab AB
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clas and Peab is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Clas Ohlson AB and Peab AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peab AB and Clas Ohlson is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Clas Ohlson AB are associated (or correlated) with Peab AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peab AB has no effect on the direction of Clas Ohlson i.e., Clas Ohlson and Peab AB go up and down completely randomly.
Pair Corralation between Clas Ohlson and Peab AB
Assuming the 90 days trading horizon Clas Ohlson is expected to generate 1.16 times less return on investment than Peab AB. In addition to that, Clas Ohlson is 1.22 times more volatile than Peab AB. It trades about 0.08 of its total potential returns per unit of risk. Peab AB is currently generating about 0.11 per unit of volatility. If you would invest 4,830 in Peab AB on August 26, 2024 and sell it today you would earn a total of 3,280 from holding Peab AB or generate 67.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clas Ohlson AB vs. Peab AB
Performance |
| Timeline |
| Clas Ohlson AB |
| Peab AB |
Clas Ohlson and Peab AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clas Ohlson and Peab AB
The main advantage of trading using opposite Clas Ohlson and Peab AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clas Ohlson position performs unexpectedly, Peab AB can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Peab AB will offset losses from the drop in Peab AB's long position.| Clas Ohlson vs. Tele2 AB | Clas Ohlson vs. Axfood AB | Clas Ohlson vs. Telia Company AB | Clas Ohlson vs. Byggmax Group AB |
| Peab AB vs. Nordic Asia Investment | Peab AB vs. Flexion Mobile PLC | Peab AB vs. Lohilo Foods AB | Peab AB vs. Lundin Mining |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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